An Observational Analysis of the Impact of Board Dynamics and Directors' Participation on Perceived Board Effectiveness

Abstract

This study addresses calls for closer examination of board dynamics by offering an inside view of director interactions. Video observations of three board meetings at each of two Australian corporations matched with director interviews and secondary data reveal distinct patterns of director interactions, their sources of variation and their impact on perceived board effectiveness. The data reveal that director interactions are multidimensional and dynamic: while group interactions across agenda items are similar, with a few directors leading the discussion, the contributing directors change across items. Moreover, directors??? inclusiveness and evenness of participation are associated with higher perceptions of board effectiveness. Lastly, the study found that director interactions change with the nature of the items, board climate and board meeting arrangements. The study contributes to the literature by moving beyond the individual-level analysis of directors??? skills or independence, and offering a detailed view of how the joint group and individual dimensions of board dynamics affect board functioning